This represents an annual growth rate of 43 per cent. But Forrester believes the sector may begin to dwindle in five years' time.

This is hardly crystal ball stuff. Five years is two lifetimes in the world of technology, so saying things might drop off is hardly a risky prediction. But Forrester expert G. Oliver Young says the relatively low cost nature of the Web 2.0 market means that revenues will always be dwarfed by the multimillion dollar figures typical of the software industry.

But he maintains that there are benefits to investing in the market.

The Web 2.0-for-business market will be attractive to a lot of start-ups and companies such as Facebook are starting to court the corporate market. However, Mr Young predicts that Web 2.0 applications will become increasingly prevalent after five years and will be absorbed into collaborative software packages.

He said: 'Tools such as mash-ups and widgets will still be growing quite aggressively, but, in general, the sector will start to slow as the price per deployment falls.'

In another study on global technology, PricewaterhouseCoopers reports that the global technology merger and acquisition market is proving to be resilient in the face of the credit crunch.

The value of deals in the sector rise by 44 per cent in 2007 to £101 billion. But these value levels are not likely to be repeated in 2008 according to PwC partner Andy Morgan. He says large companies could use the credit crunch as a chance to get ahead of the field by making use of their financial capacity, commercial might and greater depth of experience.

Global mergers and acquisitions in the technology sector continued to be dominated and driven by the mid-market in 2007. Deals between £8.02 million and £200 million accounted for 88 per cent of global volumes.

Mr Morgan points out that, historically, US buyers have accounted for about 70 per cent of UK cross-border technology deals. But this has now fallen off by half. Players from other regions, especially Asia, are picking up the slack.

North Amercian acquisition by Asian companies increased tenfold last year and this activity trebled in Europe. PwC expects this trend to continue apace in 2008.

This year has already seen a number of high-profile bids for takeovers — most notably 3i's deal with IT service company Civica. There were 11 major deals in the software and IT services sectors in 2007, including strategic moves by Oracle and SAP to strengthen their business intelligence offerings — including the £1.9 billion acquisition of Hyperion and the £3.85 billion deal for Business Objects.

The electronics and semiconductor space also saw action. Six deals valued in excess of £800 million played out last year. These included the £2.7 billion acquisition of Solectron by Flextronics and LSI Logic's purchase of Agere Systems in a deal worth £2.4 billion. There was also the demerger deal for Tyco Electronics, which was worth £12.8 billion.

Yahoo!'s potential acquisition by Microsoft continues to fill business pages. During the past few weeks, Yahoo! has been manoeuvring to strengthen its share price and that means Microsoft may have to go hostile if it wants to win the prize.

Talk of Yahoo! marrying up with AOL and about outsourcing its search functions to Google have been effective in keeping the share price higher than the $31 per share Microsoft originally proposed. The deadline for shaking hands was looming at the time of going to press.

If they failed to make friends by April 26, the proxy fight will be on in earnest. Microsoft is bound to the victor. But at what price?


>>Sherrilynne Starkie is the managing partner of Strive Public Relations, a strategic communications consultancy in the Isle of Man. She provides her views on business and technology each week in Tech Talk. Visit her business blog, Strive Notes www.strivepr.com or follow her on twitter.com/sherrilynne